Mark Zuckerberg just took a page out of Jeff Bezos’ book on innovation and leadership.
Facebook just announced it would release its own cryptocurrency, Libra, to provide cheap, accessible financial services to those without bank accounts. Facebook aims to bring in more ad revenue from businesses that sell goods to customers using the currency.
If successful, the tech company’s bold step into the financial sector could shake up the world’s banking system. It may prove especially valuable to unbanked people in the developing world, as democratic presidential candidate Andrew Yang observed, where so much of Facebook’s growth as a platform is already occurring.
Cryptocurrency, however, is notoriously risky. Goldman Sachs thought about opening a trading desk for cryptocurrencies, yet ultimately backed out of near-term plans.
For Facebook, a tech giant mired in scandal after scandal in recent years, voyaging into a whole new industry means taking on a risk that could cost the company handsomely if it fails. Jeff Bezos, however, would say that’s exactly what the best companies should do.
Bezos has launched bold, risky innovations multiple times at Amazon. For example, the e-commerce giant tried usurping the smartphone throne by releasing the Amazon Fire phone in 2014. Unfortunately for Bezos, the phone got killed just one year in and the company lost out on $170 million.
But these big bets have also proved transformational. Amazon Web Services, the company’s cloud computing platform, was launched in 2006. It made over $25 billion in 2018, delivering most of the company’s operating income. Amazon Prime Video and Alexa are other innovations that may appear obvious with hindsight, but were not without risk at the time of launch.
“While the Fire phone was a failure,” Bezos wrote in his annual shareholder letter this year, “we were able to take our learnings (as well as the developers) and accelerate our efforts building Echo and Alexa.”
Embracing ‘blind alleys’
Bezos describes trying new things as going down “blind alleys.” When ideas fail, you reach a dead end of the alley; when customers embrace the innovation, the alley opens up into a “huge, broad avenue.”
Amazon’s culture of constantly trying new things — even if it means failure or running into dead ends — is at odds with companies that focus on what competitors are doing. Companies that pay too much attention to competitors lose sight of what customers want, Bezos argues.